College Finance

Top 10 FAFSA Mistakes

1. Not filling out the FAFSA

Regardless of parental income, every single college student should fill out a FAFSA. In addition to determining “free money” like grants and scholarships, you need to fill out a FAFSA to take out federal student loans. Schools also use FAFSA information to award Federal Work Study as well as their own scholarships. Overall, it is worth it to fill out the FAFSA whether or not you think you need to.

2. Entering the wrong Social Security Number

This one is so important: if you enter the wrong social security number, you will end up having to redo the entire FAFSA. In the time that it takes for the Social Security Administration to run your SSN, reject the number, alert your school, and alert you, it would have just made sense for you to double check that you wrote the right number. And if you find yourself guessing and hoping that those numbers are right, take the time to find your social security card – it’ll be less time than resubmitting an entire FAFSA.

3. Leaving Fields Blank, not reading directions

The FAFSA can seem like an overwhelming and scary task, but the government has done a great job of writing directions and trying to answer questions as you go. Read the small print if you don’t understand what it’s asking, and don’t leave fields blank! If the online application is asking you for a number and it is zero or doesn’t apply to you, enter 0.

4. Improper reporting of Investments

The department of education has no way of notifying filers who accidentally over-state their assets by including values that Department of Education says should not be reported.  Those that accidentally inflate their assets will simply get less aid than they actually should. 

Remember, the asset values reported on the FAFSA are always reported as of the date you file, even though the income tax information comes from a previous tax year. Retirement assets, such as 401k and IRA balances, as well as insurance cash value, such as annuities and whole life insurance surrender values, are not reported as assets on the FAFSA.  If you have questions about how to report your assets properly on the FAFSA, you may want to consult with a qualified professional or contact the FAFSA Helpline to ask questions.

5. Untaxed income

Those that accidentally inflate their income or assets will qualify for less aid than they actually should while those that under-report their income may find their aid packages reduced when the error is caught and at worst could be subject to penalties and fines.  It is very common for FAFSA filers to make mistakes or struggle with how to accurately report the types of untaxed income below.  You may want to consult with a qualified professional if the following types of untaxed income may apply to you or your student:

  1. Payments to-tax deferred pension and retirement accounts (such as 401k’s, 403b’s, traditional IRAs, etc.)
  2. Child support received. 
  3. Certain tax free distributions from the following types of accounts:
    • Tax-exempt interest received
    • Tax-free distributions from Roth IRAs
    • Tax-free distributions from pensions, annuities, and life insurance contracts.
  4. Tax free housing stipends
  5. Veteran’s non-education benefits
  6. Worker’s compensation or disability payments
  7. Money received or paid on your behalf (from sources outside of your household)

6. Filling out a Paper FAFSA if your school is First-come First-served

Different schools package and award aid in different ways. If your school is first-come first-served with their aid, don’t submit a paper FAFSA unless you absolutely need to. A paper FAFSA can take weeks to process, and being among the first to submit a FAFSA could potentially earn you more aid. If you can submit electronically, do!

7. Not knowing if your family qualified for a 1040A or 1040EZ

When you get to the question about which tax form your family filed this year, be sure to read closely. If you submitted the 1040 because you were required to, mark no and move on. But, if you submitted the 1040 but could have submitted a 1040A or 1040EZ, make sure you mark “yes”. Some families who qualify for those tax forms also qualify for a Zero EFC (Expected Family Contribution) or a Simplified Version (that would not include parental assets). If you don’t know if you qualified for those, ask!

8. Selective Service

If you are a male over 18, make sure that you have registered for the Selective Service. Not having done so can disqualify you from being eligible for Federal Aid. Don’t let this simple process stand in between you and your college dreams.

9. Not making corrections

Both the paper and online FAFSA allows you to make corrections. If you realize that you’ve submitted incorrect information or your information changes (dependency status), log back in and change your information.

10. Dependency Status

Unless you qualify as an independent student, you need to fill out both the parent and student section of the FAFSA.

For students from divorced or blended families, the custodial parent for the FAFSA may or may not be the parent that has legal custody or that may claim you as a dependent on their tax return.  The custodial parent for the FAFSA is generally the one with whom you spend more nights at their house, and that parent’s spouse if remarried.  Alternately, you may also select the parent that pays for more of your financial support if you don’t stay with one parent more during the year than the other. If you are not sure which parent will count as the custodial parent on your FAFSA, you should check with department of education when you get your FSA ID well before filling out the FAFSA so that both you and the appropriate parent(s) are ready to provide their information as soon as possible.

Written and compiled by Denise Eder, Caitlin Navratil, and a talented cuLearn writer

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